Under the FSA’s client money rules, firms are required to keep client money separate from the firm’s money in segregated accounts with trust status. This helps to safeguard and ring-fence the client money in the event of the firm’s insolvency.
According to FSA, for over eight years, between 1 December 2001 and 29 December 2009, Barclays Capital failed to segregate client money maturing from its sterling money market deposits on an intra-day basis.
Such client monies were segregated overnight but matured into a proprietary bank account and were mixed on a daily basis with Barclays Capital’s own funds, typically for between five and seven hours within each trading day.
FSA managing director of enforcement and financial crime Margaret Cole said Barclays Capital committed a serious breach of FSA client money rules by failing to segregate millions of pounds of its clients’ money for over eight years. This posed a significant risk and the penalty reflects the amount of client money involved in this breach.
